The retail sector in the West Midlands has reached a long-awaited point of stabilisation, according to research from leading property consultancy, Colliers International, which released its annual Midsummer Retail Report in June.
For the first time since 2007, the West Midlands region has recorded growth in average rents. The region recorded a marginal increase of 0.4 per cent, with rents for the region as a whole increasing from £80 psf in 2015 to £81 psf in 2016. Nationally, the average rent for the UK as a whole stands at £86 psf in 2016, a 1 per cent increase on the previous year.
Of the 33 centre analysed across the region, the majority (29 centres) reported no change in rental values. In addition, this year, the report shows just two centres out of the 33 analysed seeing a decline in rental values (Burton-on-Trent at -6 per cent and Evesham at -14 per cent); a significant improvement on the previous year where 15 centres saw a decline. Meanwhile, Sutton Coldfield and Stafford reported increases in rental value in 2016 of 10 per cent and 17 per cent, respectively.
“This year’s report shows a significant improvement for the retail sector across the West Midlands,” said Emel Ahmet, Associate Director in Retail Agency at Colliers International in Birmingham. “When compared to the retail landscape in the region this time last year, when our report showed no rental growth at all across the region and 15 centres in decline, it’s encouraging, 12 months on, to see the majority of centres reporting stabilised rents and no reductions.”
In Birmingham city centre, the picture continues to be positive with rents remaining stable at £285 psf for Zone A pitches, for a third year running.
Emel Ahmet, continues: “For the last three years we’ve seen rents in Birmingham’s city core stay strong at £285 psf and this was further cemented by the arrival of Grand Central last year which provided an additional 500,000 sq ft of prime retail for the city centre. Yet, we’ve been waiting for the rest of the region to catch up and truly emerge from the clutches of the recession.
“These latest findings represent a promising sign of recovery for the region as a whole and with a further 500,000 sq ft of shopping centre development in the pipeline for the West Midlands over the next three years, we hope to see average rental values across the region continue to stabilise and even increase over the coming years.”
A number of small redevelopment schemes are scheduled to open in 2016 across the West Midlands, the largest of which is Stafford Riverside, which is expected to bring almost 250,000 sq ft of retail through an edge of centre site, to include Marks & Spencer, H&M, River Island and Primark. Other smaller new developments include: Bell Court in Stratford-Upon-Avon; Mulberry Walk in Sutton Coldfield; Mander Centre in Wolverhampton; and, Cathedral Plaza in Worcester. Significantly the vibrant leisure sector is at the forefront of these new developments.
Colliers’ report analyses vacancy rates in 15 representative centres nationally, and Worcester can be used as a barometer for wider West Midlands trends. In Worcester, vacancy rates improved marginally on this time last year, from 12 per cent in 2015 to 11.1 per cent in 2016. This was driven by slight improvement on both prime and secondary pitches, with prime vacancy now at only 5.4 per cent of units.
Emel concluded: “It’s promising to see vacancy rates in Worcester improving year on year, nevertheless, there remain 12 units in in the town which have now been vacant for more than two years. This represents 21 per cent of the vacancies and implies that these units are perhaps unsuitable for modern occupiers and in need of redevelopment either through combining multiple units or considering alternative uses. The situation in Worcester is indicative of the circumstances in towns across the region where landlords need to look at their development strategies and adapt accordingly to ensure any vacant units are meeting the needs of the modern shopper.”